Empire Company Reports Third Quarter Results

STELLARTON, NS, March 12, 2014 /CNW/ - Empire Company Limited ("Empire"
or the "Company") (TSX: EMP.A) today announced financial results for
its third quarter ended February 1, 2014. In the third quarter, the
Company recorded adjusted net earnings from continuing operations, net
of non-controlling interest, of $77.3 million ($0.84 per diluted share)
compared to $75.8 million ($1.11 per diluted share) in the third
quarter last year.

Adjusted EBITDA (1) of $277.4 million compared to $201.8 million last year, up 37.5
percent.

Adjusted net earnings from continuing operations (1), net of non-controlling interest, of $77.3 million ($0.84 per diluted
share) compared to $75.8 million ($1.11 per diluted share) last year.

Funded debt to total capital ratio of 40.6 percent compared to 21.6
percent last year.

________________(1)Excludes items which are considered not indicative of underlying
business operating performance.

Marc Poulin, President and CEO of Empire Company Limited stated, "Our
third quarter results include the first full quarter of operations from
the recently acquired Canada Safeway. We are working diligently to
successfully integrate the Canada Safeway business, and are focused on
securing operational efficiencies and reducing costs across the
network. We remain confident in our ability to secure $200 million in
annual run-rate cost synergies over a three-year period.

"Our growth in consolidated sales of 40.4 percent and adjusted EBITDA of
37.5 percent from the third quarter last year largely reflects the
initial impact of this acquisition, and the continued launch of new and
innovative commercial programs as part of the Company's strategy to
help Canadians Eat Better, Feel Better, Do Better in what remains a highly-competitive marketplace."

Dividend Declaration

The Board of Directors declared a quarterly dividend of 26.0 cents per
share on both the Non-Voting Class A shares and the Class B common
shares that will be payable on April 30, 2014 to shareholders of record
on April 15, 2014. These dividends are eligible dividends as defined
for the purposes of the Income Tax Act (Canada) and applicable
provincial legislation and, therefore, qualify for the favourable tax
treatment applicable to such dividends.

Discontinued Operations

On November 1, 2013, the Company announced that Empire Theatres
completed the sale of 46 theatres with 397 screens in separate
transactions with Cineplex Inc. and Landmark Cinemas as previously
announced on June 27, 2013. As a result of the sale, financial results
related to Empire Theatres, as previously reported in the investments
and other operations segment, have been included in discontinued
operations in the condensed consolidated statements of earnings for the
13 and 39 weeks ended February 1, 2014 and February 2, 2013.

CONSOLIDATED FINANCIAL RESULTS

13 Weeks Ended

($)

39 Weeks Ended

($)

($ in millions, except per share amounts)

Feb. 1, 2014

Feb. 2, 2013 (1)

Change

Feb. 1, 2014

Feb. 2, 2013 (1)

Change

Sales

$

6,017.6

$

4,285.5

$

1,732.1

$

15,055.5

$

13,143.4

$

1,912.1

Adjusted EBITDA (2)(3)

277.4

201.8

75.6

724.6

668.2

56.4

EBITDA (2)

188.9

195.6

(6.7)

607.9

679.5

(71.6)

Adjusted operating income (2)(3)

153.8

115.9

37.9

422.3

411.6

10.7

Operating income (2)

65.3

109.7

(44.4)

305.6

422.9

(117.3)

Adjusted net earnings from continuing operations (2)(3)(4)

77.3

75.8

1.5

245.1

261.1

(16.0)

Net earnings from continuing operations (4)

6.4

71.4

(65.0)

149.5

269.8

(120.3)

Net (loss) earnings from discontinued operations

(6.0)

2.7

(8.7)

85.1

3.8

81.3

Net earnings (4)

0.4

74.1

(73.7)

234.6

273.6

(39.0)

Adjusted EPS from continuing operations (fully diluted) (2)(3)(4)

$

0.84

$

1.11

$

(0.27)

$

3.22

$

3.84

$

(0.62)

EPS from continuing operations (fully diluted) (4)

$

0.07

$

1.05

$

(0.98)

$

1.96

$

3.96

$

(2.00)

(1)

Amounts have been restated as a result of a change in accounting policy
and reclassification of discontinued operations. See Notes 3 and 11 of
the Company's third quarter unaudited condensed consolidated financial
statements.

(2)

See "Non-GAAP Financial Measures" section of this news release.

(3)

Excludes items which are considered not indicative of underlying
business operating performance.

(4)

Net of non-controlling interest.

Sales

Consolidated sales for the 13 weeks ended February 1, 2014 were $6.02
billion compared to $4.29 billion in the third quarter last year, an
increase of $1.73 billion or 40.4 percent. During this period, sales
from the food retailing segment increased $1.73 billion or 40.4
percent. Excluding sales of $1.62 billion related to the acquisition
of Canada Safeway, sales contribution from the food retailing segment
to Empire increased by $115.4 million or 2.7 percent.

The following table reconciles sales reported by Sobeys to Empire's food
retailing segmented sales, and food retailing and investments and other
operations' segmented sales to Empire's consolidated sales from
continuing operations.

13 Weeks Ended

39 Weeks Ended

($ in millions)

Feb. 1,2014

Feb. 2,
2013

($)
Change

(%)
Change

Feb. 1,2014

Feb. 2,
2013

($)
Change

(%)
Change

Food retailing segment

Sobeys' reported sales

$

6,004.4

$

4,274.2

$

1,730.2

40.5%

$

15,016.1

$

13,101.3

$

1,914.8

14.6%

Reclassification of lease revenue from owned property recorded by Sobeys

13.5

13.9

41.8

42.2

6,017.9

4,288.1

1,729.8

40.3%

15,057.9

13,143.5

1,914.4

14.6%

Elimination of sales to discontinued operations

(0.8)

(3.3)

(7.1)

(9.3)

Empire's food retailing segmented sales

6,017.1

4,284.8

1,732.3

40.4%

15,050.8

13,134.2

1,916.6

14.6%

Investments and other operations segmented sales (1)

0.5

0.7

(0.2)

(28.6)%

4.7

9.2

(4.5)

(48.9)%

Empire consolidated sales

$

6,017.6

$

4,285.5

$

1,732.1

40.4%

$

15,055.5

$

13,143.4

$

1,912.1

14.5%

(1)

Sales generated from Empire Theatres have been recorded in discontinued
operations.

During the third quarter, Sobeys reported sales of $6.00 billion, an
increase of $1.73 billion or 40.5 percent from the $4.27 billion
reported in the third quarter of fiscal 2013. The growth in Sobeys
reported sales is primarily the result of $1.62 billion of sales
related to the Canada Safeway acquisition, combined with Sobeys'
continued investment in its retail network, coupled with the
continuation of sales and merchandising initiatives. Excluding the
impact of the Canada Safeway acquisition, Sobeys reported sales
increased $113.3 or 2.7 percent. Sobeys' same-store sales decreased
0.2 percent from the prior year. Same-store sales were impacted by low
food inflation, increased competitive square footage in the market,
ongoing competitive intensity and a severe ice storm in Ontario during
the third quarter of fiscal 2014.

Investments and other operations' sales in the third quarter were $0.5
million compared to $0.7 million in the third quarter last year, a
decrease of $0.2 million.

EBITDA

Consolidated EBITDA in the third quarter was $188.9 million compared to
$195.6 million in the third quarter last year. This decrease primarily
relates to: (i) increased inventory shrinkage ("shrink") primarily
associated with Sobeys' fresh retail inventory turns as well as shrink
associated with the new and innovative commercial programs as part of
Sobeys' strategy to help Canadians Eat Better, Feel Better, Do Better; (ii) a highly promotional environment; (iii) a weaker Canadian Dollar
("CAD") relative to the U.S. Dollar ("USD") which affected the CAD cost
of U.S. purchases; (iv) ongoing drug regulatory reform which impacted
generic prescription reimbursement rates; and (v) increased selling and
administrative expenses which were primarily due to transaction costs
associated with the Canada Safeway acquisition, offset by $83.2 million
in EBITDA related to the Canada Safeway acquisition during the quarter.

After adjusting EBITDA for items which are considered not indicative of
underlying business operating performance, as presented in the
following table, third quarter adjusted EBITDA amounted to $277.4
million compared to $201.8 million in the third quarter last year, a
$75.6 million or 37.5 percent increase.

13 Weeks Ended

39 Weeks Ended

($ in millions)

Feb. 1, 2014

Feb. 2, 2013 (1)

Feb. 1, 2014

Feb. 2, 2013 (1)

EBITDA (2)(3) (consolidated)

$

188.9

$

195.6

$

607.9

$

679.5

Adjustments:

Transaction costs associated with the Canada Safeway acquisition

67.7

-

94.6

-

Inventory adjustment

17.1

-

17.1

-

Organizational realignment and restructuring costs

3.7

3.3

12.1

7.1

Non-operating charge from equity accounted investment (4)

2.5

6.8

2.5

6.8

Dilution losses (gains)

0.1

(4.6)

(4.3)

(16.7)

(Gain) loss on disposal of assets

(2.6)

0.2

(5.3)

(11.6)

Québec distribution network restructuring

-

0.5

-

3.1

88.5

6.2

116.7

(11.3)

Adjusted EBITDA (2) (consolidated)

$

277.4

$

201.8

$

724.6

$

668.2

(1)

Amounts have been restated as a result of a change in accounting policy
and reclassification of discontinued operations. See Notes 3 and 11 of
the Company's third quarter unaudited condensed consolidated financial
statements.

(2)

See "Non-GAAP Financial Measures" section of this news release.

(3)

EBITDA generated from Empire Theatres has been recorded in discontinued
operations.

(4)

Equity earnings from Crombie REIT for the 13 and 39 weeks ended February
1, 2014 include a non-recurring cost of $2.5 million related to
arranging financing on the 70 properties acquired by Crombie REIT as
part of the Canada Safeway acquisition; equity earnings from Crombie
REIT for the 13 and 39 weeks ended February 2, 2013 include a
non-recurring charge of $6.8 million relating to Crombie REIT's
restated earnings.

Operating Income

Consolidated operating income in the third quarter was $65.3 million, a
decrease of $44.4 million from the $109.7 million recorded in the third
quarter last year. This decrease was primarily related to the factors
impacting EBITDA, as mentioned. After adjusting operating income for
items which are considered not indicative of underlying business
operating performance, as presented in the preceding table for EBITDA,
quarterly adjusted consolidated operating income amounted to $153.8
million compared to $115.9 million in the third quarter last year, an
increase of $37.9 million or 32.7 percent.

Finance Costs

Finance costs, net of finance income, for the 13 weeks ended February 1,
2014 were $49.7 million, an increase of $37.2 million from the $12.5
million recorded in the same period last year. The increase is
primarily a result of higher interest expense of $33.8 million due to
increased debt levels this quarter as a result of financing for the
Canada Safeway acquisition, lower total finance income of $1.8 million
and higher net pension finance costs of $1.6 million.

Income Taxes

The Company's effective income tax rate on continuing operations for the
third quarter of fiscal 2014 was 72.4 percent compared to 27.7 percent
in the third quarter last year. The increase in the effective income
tax rate is due to the partial non-deductibility of certain transaction
costs associated with the Canada Safeway acquisition, combined with
lower earnings before income taxes on which to calculate the effective
tax rate. The effective income tax rate on continuing operations for
the 39 weeks ended February 1, 2014 was 28.6 percent versus 27.1
percent last year.

Net Earnings from Continuing Operations

Consolidated net earnings from continuing operations, net of
non-controlling interest, in the third quarter equalled $6.4 million
($0.07 per diluted share) compared to $71.4 million ($1.05 per diluted
share) in the third quarter last year. The decline is the result of
lower operating income and higher finance costs, net of finance income,
partially offset by lower income taxes.

Adjusted Net Earnings from Continuing Operations

The table below adjusts reported net earnings from continuing
operations, net of non-controlling interest, for items which are
considered not indicative of underlying business operating
performance. After factoring in the impact of the adjustments noted in
the table, Empire recorded adjusted net earnings from continuing
operations, net of non-controlling interest, of $77.3 million ($0.84
per diluted share) for the 13 weeks ended February 1, 2014 compared to
$75.8 million ($1.11 per diluted share) recorded in the third quarter
last year.

13 Weeks Ended

39 Weeks Ended

($ in millions, except per share amounts, net of tax)

Feb. 1, 2014

Feb. 2, 2013 (1)

Feb. 1, 2014

Feb. 2, 2013 (1)

Net earnings from continuing operations by segment (2):

Food retailing

$

3.9

$

67.7

$

139.4

$

246.8

Investments and other operations

2.5

3.7

10.1

23.0

Net earnings from continuing operations (2)

$

6.4

$

71.4

$

149.5

$

269.8

EPS from continuing operations (fully diluted)

$

0.07

$

1.05

$

1.96

$

3.96

Adjustments (3):

Transaction costs associated with the Canada Safeway acquisition

$

54.4

$

-

$

73.5

$

-

Inventory adjustment

12.7

-

12.7

-

Organizational realignment and restructuring costs

3.4

2.4

8.5

5.2

Non-operating charge from equity accounted investment (4)

1.8

4.8

1.8

4.8

Finance costs associated with the Canada Safeway acquisition

0.7

-

6.6

-

Dilution losses (gains)

0.1

(3.3)

(3.0)

(11.9)

(Gain) loss on disposal of assets

(2.2)

0.1

(4.5)

(9.1)

Québec distribution network restructuring

-

0.4

-

2.3

70.9

4.4

95.6

(8.7)

Adjusted net earnings from continuing operations (2)(5)

$

77.3

$

75.8

$

245.1

$

261.1

Adjusted net earnings from continuing operations by segment (2):

Food retailing

$

71.7

$

70.6

$

230.3

$

244.7

Investments and other operations

5.6

5.2

14.8

16.4

Adjusted net earnings from continuing operations (2)(5)

$

77.3

$

75.8

$

245.1

$

261.1

Adjusted EPS from continuing operations (fully diluted)

$

0.84

$

1.11

$

3.22

$

3.84

Diluted weighted average number of shares outstanding (in millions)

92.1

68.1

76.2

68.1

(1)

Amounts have been restated as a result of a change in accounting
policy. See Note 3 of the Company's third quarter unaudited condensed
consolidated financial statements.

(2)

Net of non-controlling interest.

(3)

All adjustments are net of income taxes.

(4)

Equity earnings from Crombie REIT for the 13 and 39 weeks ended February
1, 2014 include a non-recurring cost, net of tax, of $1.8 million
related to arranging financing on the 70 properties acquired by Crombie
REIT as part of the Canada Safeway acquisition; equity earnings from
Crombie REIT for the 13 and 39 weeks ended February 2, 2013 include a
non-recurring charge, net of tax, of $4.8 million relating to Crombie
REIT's restated earnings.

(5)

See "Non-GAAP Financial Measures" section of this news release.

Net Earnings from Discontinued Operations

Net (loss) earnings from discontinued operations in the third quarter of
fiscal 2014 equalled $(6.0) million ($(0.07) per diluted share)
compared to $2.7 million ($0.04 per diluted share) in the prior year, a
decrease of $8.7 million, primarily as a result of a net loss from the
re-measurement and disposal of assets, and from restructuring costs.

Net Earnings

Empire's consolidated net earnings, net of non-controlling interest, in
the third quarter of fiscal 2014 equalled $0.4 million ($nil per
diluted share) compared to $74.1 million ($1.09 per diluted share) in
the third quarter last year. The decrease of $73.7 million is due to
the $65.0 million decline in net earnings from continuing operations,
net of non-controlling interest, accompanied by the $8.7 million
decline in net earnings from discontinued operations.

The following table reconciles Empire's segmented net earnings from
continuing operations, net of non-controlling interest, to net
earnings, net of non-controlling interest, for the 13 and 39 weeks
ended February 1, 2014 compared to the 13 and 39 weeks ended February
2, 2013.

13 Weeks Ended

($)

39 Weeks Ended

($)

($ in millions, except per share amounts, net of tax)

Feb. 1, 2014

Feb. 2, 2013 (1)

Change

Feb. 1, 2014

Feb. 2, 2013 (1)

Change

Net earnings from continuing operations by segment (2):

Food retailing

$

3.9

$

67.7

$

(63.8)

$

139.4

$

246.8

$

(107.4)

Investments and other operations

2.5

3.7

(1.2)

10.1

23.0

(12.9)

Net earnings from continuing operations (2)

$

6.4

$

71.4

$

(65.0)

$

149.5

$

269.8

$

(120.3)

EPS from continuing operations (fully diluted)

$

0.07

$

1.05

$

(0.98)

$

1.96

$

3.96

$

(2.00)

Net (loss) earnings from discontinued operations

(6.0)

2.7

(8.7)

85.1

3.8

81.3

Net earnings (loss) by segment (2):

Food retailing

$

3.9

$

67.7

$

(63.8)

$

139.4

$

246.8

$

(107.4)

Investments and other operations

(3.5)

6.4

(9.9)

95.2

26.8

68.4

Net earnings (2)

$

0.4

$

74.1

$

73.7

$

234.6

$

273.6

$

(39.0)

EPS (fully diluted)

$

-

$

1.09

$

(1.09)

$

3.08

$

4.02

$

(0.94)

(1)

Amounts have been restated as a result of a change in accounting
policy. See Note 3 of the Company's third quarter unaudited condensed
consolidated financial statements.

(2)

Net of non-controlling interest.

SEGMENTED FINANCIAL RESULTS

The Company operates and reports on two business segments:

1)

Food Retailing, which consists of wholly-owned Sobeys Inc. ("Sobeys"), and

2)

Investments and Other Operations, which as of February 1, 2014 included investments in Crombie REIT
(41.6 percent equity accounted interest; 39.3 percent fully diluted)
and interests in Genstar.

Net of consolidation adjustments which includes a purchase price
allocation from the privatization of Sobeys.

(2)

Amounts have been restated as a result of a change in accounting
policy. See Note 3 of the Company's third quarter unaudited condensed
consolidated financial statements.

(3)

See "Non-GAAP Financial Measures" section of this news release.

(4)

Excludes items which are considered not indicative of underlying
business operating performance.

(5)

Net of non-controlling interest.

Sales

Empire's food retailing segment achieved sales of $6.02 billion for the
13 weeks ended February 1, 2014, an increase of $1.73 billion or 40.4
percent over the same quarter last year. The growth in sales is
primarily the result of $1.62 billion of sales related to the Canada
Safeway acquisition, combined with Sobeys' continued investment in its
retail network, coupled with the continuation of sales and
merchandising initiatives. Excluding the impact of the Canada Safeway
acquisition, sales contribution from the food retailing segment to
Empire increased by $115.4 million or 2.7 percent. Sobeys' same-store
sales decreased 0.2 percent from the prior year. Same-store sales were
impacted by low food inflation, increased competitive square footage in
the market, ongoing competitive intensity and a severe ice storm in
Ontario during the third quarter of fiscal 2014.

Gross Profit

Sobeys recorded gross profit for the 13 weeks ended February 1, 2014 of
$1,471.8 million, an increase of $491.6 million or 50.2 percent
compared to $980.2 million in the same quarter last year. For the
third quarter, gross margin increased 158 basis points to 24.51 percent
compared to 22.93 percent for the quarter ended February 2, 2013. The
increase in gross profit and gross margin is largely a result of a
$483.3 million gross profit contribution related to the Canada Safeway
acquisition, which is net of a one-time inventory adjustment of $17.1
million, and $6.3 million of cost reductions as a result of synergies
realized during the quarter related to the acquisition. The one-time
inventory adjustment is a result of Sobeys' estimated preliminary fair
value using historical financial information from Canada Safeway, after
considering a reduction for selling costs and profit margins on selling
efforts. The amount was expensed in the current quarter as a result of
the sale of the applicable inventory.

CIO, CTO & Developer Resources

Excluding the impact related to Canada Safeway, gross margin would have
been 22.53 percent, a decrease of 40 basis points compared to the prior
year. Overall gross profit and gross margin were impacted in the
quarter by the following factors: (i) increased shrink primarily
associated with Sobeys' fresh retail inventory turns as well as shrink
associated with the new and innovative commercial programs as part of
Sobeys' strategy to help Canadians Eat Better, Feel Better, Do Better; (ii) a highly promotional environment; (iii) a weaker CAD relative to
the USD which affected the CAD cost of U.S. purchases; and (iv) ongoing
drug regulatory reform which impacted generic prescription
reimbursement rates.

EBITDA

Sobeys contributed EBITDA to Empire in the third quarter of $182.3
million compared to $188.4 million last year, a decrease of $6.1
million. EBITDA was impacted by the factors affecting gross margin, as
mentioned, and by increased selling and administrative expenses which
were primarily due to the transaction costs associated with the Canada
Safeway acquisition, offset by $83.2 million in EBITDA related to the
Canada Safeway acquisition during the quarter.

After adjusting for items which are considered not indicative of
underlying business operating performance, as presented in the
following table, resulted in an adjusted EBITDA contribution from
Sobeys to Empire of $267.6 million (4.45 percent of sales) in the third
quarter compared to a $192.4 million (4.49 percent of sales)
contribution in the same quarter last year, an increase of $75.2
million or 39.1 percent.

13 Weeks Ended

39 Weeks Ended

($ in millions)

Feb. 1, 2014

Feb. 2, 2013 (1)

Feb. 1, 2014

Feb. 2, 2013 (1)

EBITDA (2) (contributed by Sobeys)

$

182.3

$

188.4

$

587.6

$

641.1

Adjustments:

Transaction costs associated with the Canada Safeway acquisition

67.7

-

94.6

-

Inventory adjustment

17.1

-

17.1

-

Organizational realignment costs

3.0

3.3

3.0

7.1

Dilution gains

(0.3)

-

(0.6)

(0.7)

(Gain) loss on disposal of assets

(2.2)

0.2

(4.1)

(11.6)

Québec distribution network restructuring

-

0.5

-

3.1

85.3

4.0

110.0

(2.1)

Adjusted EBITDA (2)

$

267.6

$

192.4

$

697.6

$

639.0

(1)

Amounts have been restated as a result of a change in accounting
policy. See Note 3 of the Company's third quarter unaudited condensed
consolidated financial statements.

(2)

See "Non-GAAP Financial Measures" section of this news release.

Operating Income

Sobeys' operating income contribution to Empire in the third quarter was
$58.8 million compared to $102.1 million in the same quarter last year,
a decrease of $43.3 million. This decrease is primarily related to the
factors impacting gross margin, and the $67.7 million in transaction
costs related to the Canada Safeway acquisition, as mentioned. These
negative factors were partially offset by $48.8 million of operating
income directly attributable to the inclusion of Canada Safeway.

After adjusting Sobeys' operating income for items which are considered
not indicative of underlying business operating performance, as
presented in the previous table for EBITDA, adjusted operating income
contribution amounted to $144.1 million (2.39 percent of sales) in the
third quarter compared to $106.1 million (2.48 percent of sales) in the
third quarter last year, an increase of $38.0 million or 35.8 percent.

Net Earnings

During the third quarter of fiscal 2014, Sobeys contributed net
earnings, net of non-controlling interest, to Empire of $3.9 million
compared to $67.7 million in the third quarter last year. This
decrease is primarily the result of previously mentioned sales and
gross margin impacts, combined with transaction and finance costs
related to the Canada Safeway acquisition. Net earnings before a
one-time inventory adjustment of $12.7 million related to Canada
Safeway operations for the 13 weeks ended February 1, 2014 were $36.5
million.

Sobeys contributed adjusted net earnings, net of non-controlling
interest, to Empire of $71.7 million compared to $70.6 million in the
third quarter last year, an increase of $1.1 million.

Equity earnings from Crombie REIT for the 13 and 39 weeks ended February
1, 2014 include a non-recurring cost of $2.5 million related to
arranging financing on the 70 properties acquired by Crombie REIT as
part of the Canada Safeway acquisition; equity earnings from Crombie
REIT for the 13 and 39 weeks ended February 2, 2013 include a
non-recurring charge of $6.8 million relating to Crombie REIT's
restated earnings.

(6)

Interests in Genstar.

(7)

13 and 39 weeks ended February 1, 2014 included: organizational
realignment and restructuring costs of $0.7 million and $9.1 million,
respectively; dilution (losses) gains of $(0.4) million and $3.7
million, respectively; and a gain on the disposal of assets of $0.4
million and $1.2 million, respectively (13 and 39 weeks ended February
2, 2013 - organizational realignment and restructuring costs of $nil
and $nil; dilution gains of $4.6 and $16.0 million; and a gain on the
disposal of assets of $nil and $nil).

Sales

Investments and other operations' sales equalled $0.5 million in the
third quarter ended February 1, 2014 versus $0.7 million in the third
quarter last year, a $0.2 million decrease. Sales generated from
Empire Theatres have been recorded in discontinued operations.

EBITDA

Investments and other operations contributed EBITDA to Empire in the
third quarter of $6.6 million compared to $7.2 million last year. After
adjusting for items which are considered not indicative of underlying
business operating performance, as presented in the following table,
resulted in adjusted EBITDA from investments and other operations of
$9.8 million compared to $9.4 million last year.

13 Weeks Ended

39 Weeks Ended

($ in millions)

Feb. 1, 2014

Feb. 2, 2013

Feb. 1, 2014

Feb. 2, 2013

EBITDA (1)(2) (investments and other operations)

$

6.6

$

7.2

$

20.3

$

38.4

Adjustments:

Non-operating charge from equity accounted investment (3)

2.5

6.8

2.5

6.8

Organizational realignment and restructuring costs

0.7

-

9.1

-

Dilution losses (gains)

0.4

(4.6)

(3.7)

(16.0)

Gain on disposal of assets

(0.4)

-

(1.2)

-

3.2

2.2

6.7

(9.2)

Adjusted EBITDA (1)

$

9.8

$

9.4

$

27.0

$

29.2

(1)

See "Non-GAAP Financial Measures" section of this news release.

(2)

EBITDA generated from Empire Theatres has been recorded in discontinued
operations.

(3)

Equity earnings from Crombie REIT for the 13 and 39 weeks ended February
1, 2014 include a non-recurring cost of $2.5 million related to
arranging financing on the 70 properties acquired by Crombie REIT as
part of the Canada Safeway acquisition; equity earnings from Crombie
REIT for the 13 and 39 weeks ended February 2, 2013 include a
non-recurring charge of $6.8 million relating to Crombie REIT's
restated earnings.

Operating Income

Investments and other operations contributed operating income of $6.5
million in the third quarter ended February 1, 2014 compared to $7.6
million in the third quarter last year, a decrease of $1.1 million.
After adjusting investments and other operations' operating income for
items which are considered not indicative of underlying business
operating performance, as presented in the previous table for EBITDA,
resulted in an adjusted operating income contribution during the third
quarter of $9.7 million versus $9.8 million last year.

Net Earnings from Continuing Operations

During the 13 weeks ended February 1, 2014, investments and other
operations contributed $2.5 million to Empire's consolidated net
earnings from continuing operations compared to a contribution of $3.7
million in the same period last year. After adjusting for items which
are considered not indicative of underlying business operating
performance, investments and other operations contributed adjusted net
earnings from continuing operations of $5.6 million for the 13 weeks
ended February 1, 2014 compared to $5.2 million in the third quarter
last year.

Net Earnings

Investments and other operations contributed $(3.5) million to Empire's
consolidated net earnings in the third quarter of fiscal 2014 compared
to a contribution of $6.4 million in the same period last year. The
decrease of $9.9 million is due primarily to a decrease in net earnings
from discontinued operations of $8.7 million, accompanied by a decrease
of $1.2 million in net earnings from continuing operations.

CONSOLIDATED FINANCIAL CONDITION

The acquisition of Canada Safeway effective November 3, 2013, resulted
in a significant change to the capital structure of the Company as a
result of capital stock issuance of $1.84 billion and long-term debt
issuance of $3.30 billion. The financial condition measures are
presented in the table below.

($ in millions, except per share and ratio calculations)

Feb. 1, 2014

May 4, 2013 (1)

Feb. 2, 2013 (1)

Shareholders' equity, net of non-controlling interest

$

5,704.4

$

3,724.8

$

3,633.8

Book value per common share (2)

$

61.82

$

54.82

$

53.48

Bank indebtedness

$

-

$

6.0

$

1.1

Long-term debt, including current portion

$

3,891.5

$

963.5

$

997.9

Funded debt to total capital (2)

40.6%

20.7%

21.6%

Net funded debt to net total capital (2)

38.7%

12.1%

14.7%

Funded debt to EBITDA (2)(3)(4)

4.6x

1.1x

1.1x

EBITDA to interest expense (2)(3)(5)

8.5x

17.9x

16.8x

Current assets to current liabilities (2)

1.1x

1.0x

1.0x

Total assets

$

12,420.7

$

7,140.4

$

6,958.9

(1)

Amounts have been restated as a result of a change in accounting
policy. See Note 3 of the Company's third quarter unaudited condensed
consolidated financial statements.

(2)

See "Non-GAAP Financial Measures" section of this news release.

(3)

Ratios for February 1, 2014 and May 4, 2013 exclude EBITDA and interest
expense relating to discontinued operations.

(4)

Calculation uses trailing four-quarter EBITDA.

(5)

Calculation uses trailing four-quarter EBITDA and interest expense.

At the end of the third quarter, Empire's consolidated ratio of funded
debt to total capital was 40.6 percent (February 2, 2013 - 21.6
percent) with cash and cash equivalents of $284.6 million (February 2,
2013 - $370.5 million).

Shareholders' equity, net of non-controlling interest, increased $2.07
billion or 57.0 percent over the third quarter last year to $5.70
billion. Book value per common share increased to $61.82 at the end of
the third quarter versus $54.82 at the start of the fiscal year.

SUBSEQUENT EVENT

Subsequent to the close of the third quarter, on February 13, 2014,
Sobeys announced that it has entered into binding purchase agreements
with Overwaitea Food Group LP and Federated Co-operatives Limited to
purchase 22 of the 23 retail stores required to be divested as a result
of the Canada Safeway acquisition. In addition to the required
divestitures, Sobeys has agreed to sell an additional seven stores in
British Columbia comprised of both Safeway and Sobeys locations. The
agreements with Overwaitea Food Group LP and Federated Co-operatives
Limited have received approval from the Competition Bureau. The sales
are expected to occur during the Company's fourth quarter of fiscal
2014 and the first quarter of fiscal 2015. Sobeys has also signed a
binding letter of intent with another retailer for the sale of one
retail store which is also required to be divested as part of the
Canada Safeway acquisition. This sale remains subject to the
finalization of an asset purchase agreement with the purchaser and
approval from the Competition Bureau.

Total proceeds from the transactions with Overwaitea Food Group LP and
Federated Co-operatives Limited will be approximately $430.0 million
plus the value of inventory on closing dates, subject to customary
closing adjustments. Proceeds will be used to repay bank borrowings.

FORWARD-LOOKING INFORMATION

This news release contains forward-looking information that reflects
management's current expectations related to matters such as future
financial performance and operating results of the Company.
Expressions such as "anticipates", "expects", "believes", "estimates",
"could", "intends", "may", "plans", "will", "would" and other similar
expressions or the negative of these terms are generally indicative of
forward-looking statements. Forward-looking statements contained in
this news release include those relating to our expectations relating
to the timing and amount of cost synergies from the Canada Safeway
transaction which may be impacted by a number of factors, including the
effectiveness of integration efforts; and timing and proceeds from the
sale of stores which may be impacted by satisfaction of various closing
conditions and closing adjustments.

By its very nature, forward-looking information requires the Company to
make assumptions and is subject to inherent risks and uncertainties
which give rise to the possibility that the Company's expectations or
objectives will not prove to be accurate. These forward-looking
statements are subject to uncertainties and other factors that could
cause actual results to differ materially from such statements. These
uncertainties and risks are discussed in the Company's materials filed
with the Canadian securities regulatory authorities from time to time,
including the Risk Management section of the annual Management's
Discussion and Analysis ("MD&A") and the Short Form Prospectus filed
July 24, 2013.

Readers are urged to consider these and other risks, uncertainties and
assumptions carefully in evaluating the forward-looking information and
are cautioned not to place undue reliance on such forward-looking
information. The forward-looking information in this news release
reflects the Company's expectations as at March 12, 2014 and is subject
to change after this date. The Company does not undertake to update
any forward-looking statements that may be made from time to time by or
on behalf of the Company other than as required by applicable
securities laws.

NON-GAAP FINANCIAL MEASURES

There are measures included in this news release that do not have a
standardized meaning under GAAP and therefore may not be comparable to
similarly titled measures presented by other publicly traded
companies. The Company includes these measures because it believes
certain investors use these measures as a means of assessing financial
performance.

Empire's definition of the non-GAAP terms are as follows:

Same-store sales are sales from stores in the same location in both
reporting periods.

Gross profit is calculated as sales less cost of sales.

Gross margin is gross profit divided by sales.

Earnings before interest, taxes, depreciation and amortization
("EBITDA") is calculated as net earnings from continuing operations
before finance costs (net of finance income), income taxes, and
depreciation and amortization of intangibles.

EBITDA margin is EBITDA divided by sales.

Adjusted EBITDA is EBITDA excluding items which are considered not
indicative of underlying business operating performance.

Operating income, or earnings before interest and taxes ("EBIT"), is
calculated as net earnings from continuing operations before finance
costs (net of finance income) and income taxes.

Operating income margin is operating income divided by sales.

Adjusted operating income is operating income excluding items which are
considered not indicative of underlying business operating performance.

Adjusted net earnings from continuing operations is net earnings from
continuing operations, net of non-controlling interest, excluding items
which are considered not indicative of underlying business operating
performance.

Funded debt is all interest bearing debt, which includes bank loans,
bankers' acceptances and long-term debt.

Net funded debt is calculated as funded debt less cash and cash
equivalents.

For a more complete description of Empire's non-GAAP terms, please see
Empire's MD&A for the third quarter ended February, 1, 2014.

CONFERENCE CALL INFORMATION

The Company will hold an analyst call on Thursday, March 13, 2014
beginning at 4:00 p.m. (Eastern Daylight Time) during which senior
management will discuss the Company's financial results for the third
quarter ended February 1, 2014. To join this conference call, dial
(888) 231-8191 outside the Toronto area or (647) 427-7450 from within
the Toronto area. To secure a line, please call 10 minutes prior to the
conference call; you will be placed on hold until the conference call
begins. The media and investing public may access this conference call
via a listen mode only. You may also listen to a live audiocast of the
conference call by visiting the Company's website located at www.empireco.ca.

Replay will be available by dialing (855) 859-2056 and entering passcode
4837555 until midnight March 20, 2014, or on the Company's website for
90 days following the conference call.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

To view and download the Company's unaudited condensed consolidated
financial statements for the third quarter of fiscal 2014 ended
February 1, 2014, please access the following link:

This information is also available for download at www.sedar.com or by accessing the Investor Centre section of the Company's website at
www.empireco.ca.

ABOUT EMPIRE

Empire Company Limited (TSX: EMP.A) is a Canadian company headquartered
in Stellarton, Nova Scotia. Empire's key businesses include food
retailing and related real estate. With over $19 billion in annual
sales and approximately $12.4 billion in assets, Empire and its
subsidiaries, including franchisees and affiliates, employ more than
124,000 people.

Additional financial information relating to Empire, including the
Company's Annual Information Form, can be found on the Company's
website at www.empireco.ca or at www.sedar.com.

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